topic ?? in State tax filing

Where do I enter the Michigan State medical portion of the auto insurance premium?

nanfecteau — Tue, 04 Jun 2019 23:45:58 GMT

Edited 3/20/16 at 5:15 AM PT You enter the medical portio...

ToddL — Tue, 04 Jun 2019 23:46:00 GMT

Edited 3/20/16 at 5:15 AM PT

You enter the medical portion of the auto insurance premium in the " Michigan's Homestead Property Tax and Home Heating Credits" interview.

Why? Because, Michigan's Homestead Property Tax and Home Heating Credits depend on your household resources, not your taxable income.

In calculating your household resources, MI allows you to deduct the medical insurance portion of your automobile insurance premiums, if any. This is identified on your insurance bill as PIP (Personal Injury Protection). PIP is an extension of car insurance available in some U.S. states that covers your medical expenses.

The auto insurance surcharge you pay because of Michigan's auto insurance no-fault law is not "medical insurance for you". It is a cost passed on to policyholders (in whole or in part) by the auto insurance company to pay their assessment for the costs of catastrophic medical claims.

From IRS Publication 502 (2015), Medical and Dental Expenses

"You can include in medical expenses insurance premiums you pay for policies that cover medical care (for you and members of your family)."

All auto insurance companies operating in Michigan are assessed to cover the catastrophic medical claims occurring in Michigan. Although those assessments are generally passed on to auto insurance policyholders, they are not insurance premiums the policyholder is paying for policies that cover (the policyholder's) medical care

IF what you say is true for Michigan returns, then why do...

psmbell — Tue, 04 Jun 2019 23:46:01 GMT

IF what you say is true for Michigan returns, then why doesn't TurboTax eliminate the opportunity for errors by removing the question from its Michigan Tax Interview, or at least noting that nobody would likely be able to properly use this item as a deduction?? Since you are a TurboTax TaxPro, a word from you might go a long way in motivating them to correct their thoughts on this issue.

I would like a answer to this as well

nateedogg32 — Tue, 04 Jun 2019 23:46:03 GMT

I would like a answer to this as well

Where are you seeing this in the state interview?

ToddL — Tue, 04 Jun 2019 23:46:04 GMT

Where are you seeing this in the state interview?

??

nateedogg32 — Tue, 04 Jun 2019 23:46:06 GMT

The question is appropriate because, although the Michiga...

bwa — Tue, 04 Jun 2019 23:46:07 GMT

The question is appropriate because, although the Michigan no-fault premium may not be deductible, Michigan PIP is.

Actually, I went through the MI state interview (desktop...

ToddL — Tue, 04 Jun 2019 23:46:08 GMT

Actually, I went through the MI state interview (desktop and online) and couldn't find anything that referred to a medical insurance deduction. Any help on finding it? The Catastrophic Loss surcharge is different from PIP.

Someone familiar with MI taxes would have to answer that....

bwa — Tue, 04 Jun 2019 23:46:09 GMT

Someone familiar with MI taxes would have to answer that. I don't live in MI so I don't have the MI state module.

psmbell & nateedogg32: where did you see this in the MI s...

ToddL — Tue, 04 Jun 2019 23:46:11 GMT

psmbell & nateedogg32: where did you see this in the MI state interview? What section and how was it titled?

What do I enter in medical portion of auto insurance?This...

nateedogg32 — Tue, 04 Jun 2019 23:46:12 GMT

What do I enter in medical portion of auto insurance?This falls under medical insurance or HMO premiums reduced household resources which I think is under HOMESTEAD CREDITS.

To TurboTaxToddL: You will find the relevant area under...

psmbell — Tue, 04 Jun 2019 23:46:13 GMT

To TurboTaxToddL: You will find the relevant area under "Medical Insurance or HMO Premiums Reduce Household Resources" in the State Taxes interview for Michigan. It states, "We have already included medical insurance premiums you previously entered on your federal return. If your auto insurance includes medical payments, enter the medical care portion of your auto insurance premiums here." My policy lists Personal Injury Protection as having three sub-headings: Medical Benefits, Work Loss Benefits, and Survivors' Loss Benefits. The premium for PIP is listed, but it does not have a breakdown for each sub-heading. I have checked with my insurance provider several times, and they insist that there is no separate breakdown of the PIP premium for the three subheadings (in this particular case, for the "Medical Benefits" portion of the Personal Injury Protection). If my insurance provider is typical of other insurance companies in Michigan, and if the PIP as a whole is not the "medical care portion of your auto insurance premium", and the "Medical Portion" cannot be broken out separately, what good is this question in the MI state interview?

Good point. Unfortunately the insurance company is not pr...

ToddL — Tue, 04 Jun 2019 23:46:15 GMT

Good point. Unfortunately the insurance company is not providing the detail required by the state's tax law. Your options are to claim 1/3 of the PIP premium as Medical Benefits, or claim the majority (80%?) of the PIP premium as Medical Benefits. My rationale for the 80% approach is that, of the three coverages included in PIP, medical costs are almost certainly the most costly.

Great reply! Makes a lot of sense. Thank you!

psmbell — Tue, 04 Jun 2019 23:46:16 GMT

Great reply! Makes a lot of sense. Thank you!

Glad I could help!

ToddL — Tue, 04 Jun 2019 23:46:18 GMT

Glad I could help!

What is the best way to calculate the three categories in...

nateedogg32 — Tue, 04 Jun 2019 23:46:19 GMT

What is the best way to calculate the three categories included PIP and medical cost?

If your insurer does not provide a breakdown (how much of...

ToddL — Tue, 04 Jun 2019 23:46:20 GMT

If your insurer does not provide a breakdown (how much of PIP is for Medical Benefits), You have to make a goo-faith estimate. Reasonable options are to 1) claim 1/3 of the PIP premium as Medical Benefits, or 2) claim the majority (80%?) of the PIP premium as Medical Benefits. My rationale for the 80% approach is that, of the three coverages included in PIP, medical costs are almost certainly the most costly.

Thank you

nateedogg32 — Tue, 04 Jun 2019 23:46:22 GMT

Thank you

The answer from Turbo Tax is not quite complete. It is m...

ttblog555 — Tue, 04 Jun 2019 23:46:23 GMT

The answer from Turbo Tax is not quite complete. It is misinterpreting by mixing two separate coverage lines/charges to the Michigan No-Fault policy. One is the Personal Injury Protection (PIP). Under this line: Although identified by a blogger as split into three categories of benefits, auto policies typically identify two which are the PIP Medical (written as Excess/coordinated with the household medical) or Full as in first dollar), and PIP Wage Loss. Some insurers do not provide a premium breakdown, some do. When not split, utilizing the 80/20 rule (if acceptable by the State) should be a fair division. THIS coverage IS a premium from the insurance company that goes to paying claims for these losses up to a certain amount.
The Second coverage line that was referenced, but mixed in above, is the Michigan Catastrophic Claims Association (MCCA) assessment. This coverage is a state fund that supplements the Auto insurer's policy for catastrophic medical claims the exceed a certain amount, transferring the risk from the insurer, to this fund. Most insurers split this assessment out on their policy, a few include it under PIP. However, it is a standard charge so the agent should be able to break this out each year for their customer. Is this assessment also deductible? That I do not know, but it is a "medical" expense per se'. Answer from Independent Insurance Agent

With the utmost respect to TurboTaxToddL, I understand ex...

BlackjackWidow — Tue, 04 Jun 2019 23:46:26 GMT

With the utmost respect to TurboTaxToddL, I understand exactly your position and appreciate your research. You cited the IRS guidelines regarding what is considered medical premiums. I do not see the source for your conclusion that the full Michigan Personal Injury Protection premium is not the "medical portion of the auto insurance". I understand your logic behind it, and it will certainly not be incorrect to enter only a portion of the PiP in this part.

I will, however, make note that the PiP seems to generally be considered the medical portion of the auto insurance policy. This Council on Aging brochure http://www.gratiotmi.com/LinkClick.aspx?fileticket=u-yN_Lr3n64%3D&tabid=140 lists the PiP specifically as one item to bring to appointments where they're helping the elderly file their taxes. A Google search for similar items turns up a few more. I believe it is one of those not-very-well-defined terms in the Michigan code.

As it is listed on my policy, it is Personal Injury Protection and covers my medical needs in the case of an accident. Therefore, in the broad terms defined in the Michigan State tax laws, it appears to me to be insurance for my medical needs, and satisfies the criteria.